Strong results profitable growth back on track

Transcription

1 Nokian Tyres plc Result February, 2011 Strong results profitable growth back on track Mr. Kim Gran President and CEO Nokian Tyres plc

2 INDEX 1. General overview of 2010 Summary Market overview Nokian Tyres performance 2. Nokian Tyres financial performance 3. Profit centres (incl. Russian operations) 4. Other markets 5. Nokian Tyres going forward 6. Appendixes 2

3 GENERAL OVERVIEW OF 2010 Strong results, profitable growth back on track Key figures 10-12/ /09 Change (%) 1-12/ /09 Change (%) Net Sales % % Operating result % % Margin (%) 24.9 % 16.5 % 21.0 % 12.8 % Result before tax % % Result for the period % % Margin (%) 17.0 % 11.8 % 16.0 % 7.3 % EPS (EUR) % % RONA (%), rolling 12 months Cash flow from operations % % Gearing (%) Summary Nokian Tyres back on a profitable growth track on improving markets Nokian Tyres market shares up in Nordic, Russia & CIS and CE Net sales 1,058.1 m, up 32.5% Operating profit m, more than doubled Pre-tax profit nearly tripled to m Cash flow from operations m all-time high due to improved NWC rotation Car tyre ASP improved 5% compensating raw material cost increases Capacity ramp-up in Russia, restructuring and better capacity utilization improved productivity Vianor expanded by 148 to 771 stores Board proposes a dividend of 0.65 per share Outlook: Profitable growth Strong overall demand and order book Retailers low inventories drive sales growth Further tyre price increases & mix improvement Raw material cost estimated to go up 25-28% in 2011 Capacity increasing: Lines 9&10 to be installed in Russia in 2011 Profitability supported by Improved cost structure Higher sales volume, better mix and ASP Increasing share of Russian production productivity up Year 2011 estimates: The company is positioned to provide strong sales growth and to improve operating profit compared to

4 GENERAL OVERVIEW OF 2010 Market overview: Clear improvement in the business environment Car tyres Tyre market volumes improved clearly Economies in the Nordic countries and Russia improved, consumer confidence and car sales picked up Demand grew in all Nokian Tyres core markets Distributors credit capability improved Distributors low inventory levels boosted sales Heavy tyres Raw materials & tyre prices Currencies Machinery and equipment production on the rise Demand and prices of pulp, sawmill products, metals and food increased Production of forestry and other machinery started to recover rapidly Tyre demand improved clearly in all product groups Demand exceeded supply in some product groups and sizes Raw material prices increased rapidly Raw material prices have increased significantly from mid 2009 to end of 2010 Tyre industry increased prices in summer and autumn 2010, further increases following in Q4/2010 and early 2011 Favourable development of currency exchange rates Currencies on Nokian Tyres core markets were stronger against the Euro in 2010 vs

5 GENERAL OVERVIEW OF 2010 Nokian Tyres performance: Strong sales, improved profitability Sales and market position Profitability and cash flow Production Distribution Volumes and market shares up + Sales grew in all profit centres + Strong winter tyre and forestry tyre sales + Car tyres market share improved in Nordic countries, CE and in Russia + Test victories of Nokian summer and winter tyres boosted sales + Heavy tyre sales and orders improved significantly Price increases to offset increased raw material cost + Raw material cost still relatively low in H1/2010, increasing since Q3/ Price increases implemented, car tyre ASP up by 5% + Profitability supported by higher sales volume, improved sales mix and increasing share of Russian production + Moderate growth of fixed costs improved margins + NWC rotation improved, Cash flow from operations all-time high m Productivity boost from increased production volumes + Higher utilization of capacity and growing share of Russian production + 8 th production line taken into use in Russian factory in Q3/2010, lines 9&10 to be installed in Q2-Q3/ Demand exceeded supply capacity in H2/2010 New Vianor shops + Vianor expanded to 771 stores in 20 countries; increase by 148 stores in

6 INDEX 1. General overview of Nokian Tyres financial performance Operating result per quarter Gross sales by market area Raw material cost development Development of key financials RONA and EVA Capex Cash flow 3. Profit centres (incl. Russian operations) 4. Other markets 5. Nokian Tyres going forward 6. Appendixes 6

7 FINANCIAL PERFORMANCE Group operating result per quarter Cumulative operating result per quarter (m ) 2010 Net sales 1,058.1 m (798.5 m ), +32.5% EBIT m (102.0 m ), % Group operating result per quarter (m ) 10-12/2010 Net sales m (247.7 m ), +48.9% EBIT 91.8 m (40.8 m ), % 7

8 FINANCIAL PERFORMANCE Gross sales by market area 2010 Sales of Nokian Tyres Group: 1,121.2 m, +32.2% Sales of Manufacturing Units: m, +36.4% Sales development in euros Nordic countries +29.1% Russia and CIS +34.7% Russia: +78.0% Central and Eastern Europe +43.8% North America +9.5% Sales development in euros Nordic countries +38.7% Russia and CIS +35.0% Russia: +78.7% Central and Eastern Europe +48.7% North America -5.7% 8

9 FINANCIAL PERFORMANCE Raw material cost rising Raw material cost development index 2000-E2011 Value of raw material consumption (%) Reinforcing Materials 19% Chemicals 12% Natural Rubber 27% Fillers 13% Synthetic Rubber 29% Nokian Tyres raw material cost (EUR/kg) Raw material cost increased by 5% in 2010 vs increased by 30% in Q4/2010 vs. Q4/2009 increased by 18% in H2/2010 vs. H1/2010 Raw material cost is estimated to increase by 13% in Q1/2011 vs. Q4/ % in Q1/2011 vs. Q1/ % in 2011 vs In order to maintain material margin +7% in ASP required in 2011 vs

10 FINANCIAL PERFORMANCE Development of key financials Net sales (m ) and Net sales growth (%) EBIT (m ) and EBIT margin (%) Net profit (m ) and net margin (%) Interest bearing net debt (m ) and gearing (%) 10

11 FINANCIAL PERFORMANCE RONA (%) and net operating performance (EVA) 1) Group EVA (m ) and RONA (%) Manufacturing EVA (m ) and RONA (%) Car and Van Tyres EVA (m ) and RONA (%) Heavy Tyres EVA (m ) and RONA (%) 1) EVA is calculated based on 12% interest on capital employed. 11

12 FINANCIAL PERFORMANCE Capex 2010 Adjusted to maximize cash flow and utilize existing capacities Capex 2011 Significant investment to secure strong profitable growth Investments in 2010 Q4/2010: 19.8 m (9.6 m ) 2010: 50.5 m (86.5 m ) Nokian Tyres Capital expenditures (m ) Russia Capacity ramp-up and investments Lines 7-8 completed with start-up in 2010 Lines 9-10 ordered for installation and start-up in Q2-Q3/2011 Estimated investments for 2011 Approximately 117 m Investments in Russia: 62 m Moulds for new products 26m ICT and production bottlenecks 14 m Vianor chain 9 m 12

13 FINANCIAL PERFORMANCE Group Operating Cash Flow and Free Cash Flow Both the Cash flow from operations and the Free cash flow all-time high in 2010 Cash flow from operations: m in 2010 Inventories and Trade receivables rotation days improved Russian receivables 24% (23%) of total at year end Group Cash flow from operations and Free Cash flow Manufacturing Cash flow from operations Vianor Cash flow from operations 13

14 INDEX 1. General overview of Nokian Tyres financial performance 3. Profit centres General overview Passenger Car Tyres (incl. Russia) Heavy Tyres Truck Tyres Vianor 4. Other markets 5. Nokian Tyres going forward 6. Appendixes 14

15 PROFIT CENTRES General overview of 2010 Net sales 1,058.1 m ; +32.5% Truck Tyres; 3.6% (3.2%) Heavy Tyres; 7.1% (5.7%) EBIT m ; % Truck Tyres; 3.7% (2.3%) Heavy Tyres; 5.9% (0.0%) Vianor; 1.7% (-2.8%) Vianor; 26.9% (31.1%) Car Tyres; 62.4% (60.0%) Car Tyres; 88.7% (100.5%) Passenger Car Tyres Net sales: m ; +35.5% EBIT: m ; +94.5% EBIT margin: 28.8% (20.1%) Key products: studded and nonstudded winter tyres, high-speed summer tyres Key markets: Nordic countries, Russia and CIS countries, Central & Eastern Europe, North America YEAR 2011 Capacity ramp-up: increase production and productivity Increase sales and market shares in core markets, Russia and Nordic countries Increase prices to offset the growing raw material cost Improve sales mix and ASP Heavy Tyres Net sales: 81.0 m ; +61.8% EBIT: 13.7 m ; +76,435.9% EBIT margin: 16.9% (0.0%) Key products: tyres for forestry, industrial and agricultural machinery YEAR 2011 Improve production volumes and productivity Increase prices to offset the growing raw material cost Expand the distribution network Add service centres Truck Tyres Net sales: 41.2 m ; +44.3% Key products: truck tyres and retreading materials Vianor Net sales: m ; +12.7% EBIT: 4.0 m ; % EBIT margin: 1.3% (-1.1%) 771 stores in 20 countries in Nokian Tyres core markets YEAR 2011 Improve sales and market shares Continue to expand the network and the number of partners to 900 stores Increase service sales 15

16 PROFIT CENTRES Passenger Car Tyres 2010: Improved sales and productivity Performance in Sales and order book improved clearly in all core market areas + Market share up in Nordic countries, CE and Russia + Price increases implemented to offset higher raw material cost + Improved sales mix and favourable currency rates higher ASP + Several magazine test wins for Nokian Hakka summer tyres and Nokian Hakkapeliitta 7 studded winter tyre + 2 new production lines on stream in Russia in 2010, totalling 8 lines + Production volume & productivity up + Lower investments, inventories and receivables Improved cash flow and working capital rotation - Supply capacity a bottleneck for sales in H2/2010 Net sales: 2010: m (527.3 m ); +35.5% 10-12/2010: m (135.6 m ); +63.2% EBIT: 2010: m (106.2 m ); +93.5% 10-12/2010: 69.9 m (28.2 m ); % EBIT margin: 2010: 28.8% (20.1%) - in core markets 31.6% (24.3%) - In other markets 26.4% (18.6%) 10-12/2010: 31.6% (20.8%) Key actions and targets for 2011 Increase sales in all areas, especially in Russia Higher sales Improve market shares in core markets Increase prices to offset growing raw material cost Improve sales mix Higher ASP Defend brand and price position Increase production capacity Improve productivity, utilize the most feasible capacities Lower cost Cost control Focus on mix improvement and growth on core markets Higher RONA Nokian Hakkapeliitta 7 Test winner in 16 several countries

17 RUSSIA Back to growth Sales and demand recovering trailing improving car sales, growing replacement sales of tyres and low inventories of distributors Sales in Russia in 2010 grew by 78.0% to m (116.7 m ) Sales in CIS (excluding Russia) in 2010 were 24.1 m (55.4 m ) Nokian Tyres is clear # 1 in premium tyres in Russia and CIS countries 17

18 RUSSIA Vianor Partner stores in Russia & CIS as of 31 December stores in 260 cities; +76 stores in 2010 Vorkuta Tver Kamen-na-Obi 18

19 RUSSIA Overview of Nokian Tyres Russian operations Nokian Tyres market position in Russia Only global tyre company with a state-of-the-art and efficient factory in Russia - Close access to markets - Within customs zone (duty 20% for import) Clear market and price leader in core product categories Widely recognised and strong brand both company (Nokian Tyres) and products (Hakkapeliitta) Strong distribution chain covering all of Russia based on long-term and close customer relationships Only global producer with a controlled tyre distribution network 429 Vianor stores in Russia and CIS Nokian Tyres to further strengthen its market leader position in Russia Nokian Tyres factory in Russia Eight production lines operating Lines 7 and 8 installation completed in 2010, lines 9-10 ordered for installation in Q2-Q3/2011 State-of-the art machinery, high European quality standards Exports from the Vsevolozhsk factory to over 30 countries, biggest consumer goods exporter in Russia Housing project, Hakkapeliitta Village phase I completed Number of personnel on 31 December, 2010: 851 (640) 19

20 RUSSIA Russia s economy clearly recovering Russia s GDP growth Major trends and expectations x Nominal GDP (EUR bn) '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 CAGR 09 15: 13.9% Mean 09 15: 4.3% Nominal GDP (B EUR) Real GDP growth (%) Consumer confidence in Russia 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Real GDP growth (%) x Russia s economy has clearly started to recover from the severe crisis of In 2009, economy fell into recession with an annual decrease in GDP of 7.9%, but in 2010 it grew by estimated 4.0% Recovery is expected to keep momentum in 2011, backed by high oil and commodity prices Overall growth trend will continue: average GDP growth for is estimated at >4% a year; faster growth is possible, but restricted by unbalanced structure of the economy; weak investment and the election cycle Domestic demand revival gradually started due to increased disposable incomes Ruble exchange rate fluctuated in 2010 with yearaverage clearly stronger against major currencies vs. 2009; in 2011, there are no fundamental reasons for the ruble devaluation it may remain stable or strengthen further Source: Rosstat, EIU and Nokian Tyres estimates 20

21 RUSSIA Car sales back on a growth track Russian car sales ('000) x Russian car sales forecast basic scenario '05 '06 '07 '08 '09 10 '11f 12f 13f 14f 15f Local Brands Western Brands - Used Western Brands - New Monthly car sales Source: AEB; IHS Global Insight; MinPromTorg; Nokian Tyres estimates Car market summary Sales of new cars and LCVs in Russia increased by 60% in Dec 2010 vs. Dec 2009 and by 30% in 2010 vs Growth clearly accelerated in the second half of the year and especially in Q4, both for domestic and foreign brands, across all market segments Government scrappage scheme brought very positive results, albeit supporting mostly cheap brands and models In 2010 (until October) 400 thousand certificates issued and over 320 thousand cars sold The program is announced to continue also in 2011 (extra cars) Due to rapid recovery of demand, there was lack of cars during the second half of the year, as manufacturers had cut their quotas for Russia The situation improved towards the end of the year, but long lead times remain for many popular brands and models This deferred demand will continue to positively affect sales in 2011 The car market is forecasted to reach 2.5 million cars and LCVs in 2011, showing a 30% growth Financing of car purchases revived in 2010, with share of sales financed by banks and car manufacturers reaching pre-crisis levels Government implemented own car loan support program, with 355 thousand applications and 166 thousand loans granted in 2010 The program will continue in 2011 with the participation of 117 banks 21

22 RUSSIA Tyre market expected to reach pre-crisis level in 2011 Car and van tyre replacement market (volume) Car and van tyre replacement market (value) % A CAGR % CAGR Volume (million tyres) x B C '05 '06 '07 '08 '09 '10 '11f '12f '13f '14f '15f +14.7% +1.9% Value (EUR m) x % A B C '05 '06 '07 '08 '09 '10 '11f '12f '13f '14f '15f +30.1% +28.4% +7.4% Note Source: Traditional segments / price positioning: index 100 = market leader; A: > 80; B: 60 80; C: <60 Nokian Tyres estimates 22

23 PROFIT CENTRES Heavy Tyres 2010: Higher demand, production doubled Performance in Tyre demand and sales clearly up, especially in forestry tyres + Improved distribution network with new distributors + Vianor industrial service concept, 22 stores in Nordic countries + Production volume doubled vs. 2009; weekly capacity in Nokia in full use as from Dec/2010 Large share of sales to OE customers with fixed prices until October & increased raw material cost cut margins in H2 Production ramp-up time lag vs. demand growth Net sales: 2010: 81.0 m (50.1 m ); +61.8% 10-12/2010: 25.7 m (15.3 m ); +68.0% EBIT: 2010: 13.7 m (0.0 m ); +76,435.9% 10-12/2010: 4.2 m (2.2 m ); 88.6% EBIT margin: 2010: 16.9% (0.0%) 10-12/2010: 16.5% (14.7%) Key actions and targets for 2011 Expand the distribution network, especially in Russia and CIS Improve service concepts and logistics Accelerate development of new products Increase prices further to offset the growing raw material cost Maximize production and sales of radial products Improve sales mix, share of aftermarket sales Full utilization of capacity, improve production volumes & productivity Evaluate options to increase production Increase outsourced production Focus on profitable growth and higher capacity Higher sales Higher ASP Lower cost Higher RONA Nokian Forest Rider 23

24 PROFIT CENTRES Truck Tyres 2010: Good performance in recovering markets Performance in Demand and sales clearly up in all geographical market areas + Increased truck manufacturing + Improved utilization rate in the transport sector + Market share improved in the Nordic countries, CE and Russia + New products wider range for premium & standard truck tyres + Successful timing of purchases and tyre price increases, favourable currency rates profitability all-time high Net sales: 2010: 41.2 m (28.5 m ); +44.3% 10-12/2010: 12.9 m (9.3 m ); +38.9% Key actions and targets for 2011 Increase sales further in Nordic countries, Russia and CIS Expand in Eastern Europe utilising the Vianor truck concept Utilize the combination of new & retreaded tyres as a sales concept Increase tyre prices to offset higher purchase costs Utilize the stronger winter product range (incl. Hakkapeliitta truck tyres) Improve the product range with new sizes Improve off-take contract manufacturing and logistics further Expand sales, utilize group synergies and the improved product offering Nokian Hakkapeliitta Truck F 24

25 PROFIT CENTRES Vianor 2010: Foothold on core markets strengthened Performance in Sales and market shares improved + Car service sales improved by 21% + Vianor expanded to 771 stores in 20 countries; +148 in 2010 Profitability in equity-owned stores still below long-term targets Key actions and targets for 2011 Improve tyre sales and market shares Increase sales of fast fit, tyre hotels and other services Increase e-commerce sales Continue to expand the network and the number of partners. Target: over 900 stores by the end of 2011 Net sales: 2010: m (273.2 m ); +12.7% 10-12/2010: m (104.5 m ); +17.3% EBIT: 2010: 4.0 m (-3.0 m ); % 10-12/2010: 11.8 m (7.9 m ); +50.8% EBIT margin: 2010: 1.3% (-1.1%) 10-12/2010: 9.7% (7.5%) Cement and improve market leader position as a distributor in Nokian Tyres core markets 771 Vianor stores globally 25

26 PROFIT CENTRES Vianor Globally Overview of stores as of 31 December 2010 Total: 771 stores in 20 countries (+57 in Q4/2010, +148 in 2010) (169 owned, 602 franchising/partner) Retreading plants Finland 2 Sweden 1 Norway 2 USA: 10 owned Nordic and Baltic countries: Total 228 Finland 55 owned, 9 franchising/partners Sweden 54 owned, 32 partners Norway 45 owned, 17 partners Baltic 16 partners Central Europe: Total 104 Germany 9 partners Switzerland 3 owned Czech Republic 33 partners Slovakia 12 partners Poland 31 partners Bulgaria 16 partners RUK + other CIS countries: Total 429 Russia 2 owned, 302 partners Ukraine 99 partners (incl 13 Vianor Truck) Kazakhstan 13 partners Armenia 1 partner Moldova 3 partners Georgia 3 partners Belarus 6 partners (incl 1 Truck) Action plan 2011: Expand network Start-up Q1: Italy Pending: Romania 26

27 INDEX 1. General overview of Nokian Tyres financial performance 3. Profit centres (incl. Russian operations) 4. Other markets Nordic countries Central and Eastern Europe North America Other CIS Countries 5. Nokian Tyres going forward 6. Appendixes 27

28 OTHER MARKETS Nordic Countries (Fin, Swe, Nor) A solid part of the core markets GENERAL Mature market with estimated annual growth 1-3% (in 2009 exceptionally -10%) Winter tyre legislation use compulsory Three dominating brands (Nokian Tyres, Michelin and Continental) with more than 60% market share Sales development in Nordic Countries NOKIAN TYRES Market and price leader with over 30% market share in winter tyres and more than 15% in summer tyres Only local producer & best distribution network Strong role of own Vianor tyre chain Local player product range and service specially designed for northern conditions The new Nokian Hakkapeliitta 7 studded tyre has dominated impartial winter tyre tests which has boosted sales 30 % 28 % 25 % 23 % 20 % 18 % 15 % 1997 Market share in Nordic Countries Car & LT total 28

29 OTHER MARKETS Central and Eastern Europe Growing sales, improving profitability GENERAL Alpine area, CEE and Balkans Globally the biggest winter tyre market potential 8 times that of Nordic Countries Winter tyres is the fastest growing segment in CEE and Balkans Sales in Central and Eastern Europe NOKIAN TYRES Nokian Tyres brand position improving Vianor expansion to CEE Improved availability and distribution Logistics and service centre with 24 hour service to main markets Tailored product range 29

30 OTHER MARKETS North America GENERAL Canada & US snow belt area Market potential for winter tyres twice that of Nordic Countries Winter tyre legislation in Canada support the growth of demand Sales development in North America NOKIAN TYRES Strong brand and product quality reputation Exclusive distribution in selected areas Strong historical presence New start in following improved market environment Establishment of Vianor in New England 30

31 OTHER MARKETS Other CIS Countries Underlying potential GENERAL Strong market growth potential Increasing sales of new cars Countries with northern conditions ; but no winter tyre legislation Currency risks Good potential for future growth at aboveaverage price levels Sales development in other CIS countries NOKIAN TYRES Market and price leader in A-segment tyres Only tyre producer with a controlled tyre chain Rapidly growing Vianor network No customs duty between Russia, Ukraine and other CIS countries import duties from other areas (10-20%) penalise competitors 2010 sell-in decreased due to carry-over stocks of distributors 31

32 INDEX 1. General overview of Nokian Tyres financial performance 3. Profit centres (incl. Russian operations) 4. Other markets 5. Nokian Tyres going forward 6. Appendixes 32

33 NOKIAN TYRES GOING FORWARD Outlook for 2011 and planned actions: Nokian Tyres sales to improve backed by increasing capacity ASSUMPTIONS Growing core market: Nordic countries, Russia & CIS GDP growth 3-5% New car sales improving Russian economy growing, consumer confidence improving Currencies on Nokian core markets expected to be stable Further tyre price increases to offset higher raw material cost ( /kg) Cost up by 30% in Q4/2010 vs. Q4/2009 Cost estimated to increase by 13% in Q1/2011 vs. Q4/2010 Cost estimated to increase by 25-28% in 2011 vs Passenger car tyre operation environment Demand growing in core markets Low carry-over distributor inventories offer growth opportunities Demand improving for winter tyres, legislation in Europe Receivable risks are back to normal NOKIAN TYRES OUTLOOK: Profitable growth Strong overall demand and order book Retailers low inventories drive sales growth Further tyre price increases & mix improvement Raw material cost estimated to go up 25-28% in 2011 Capacity increasing: Lines 9&10 to be installed in Russia in 2011 Profitability supported by Improved cost structure and productivity Higher sales volume, better mix and ASP Increasing share of Russian production productivity up Year 2011 estimates: The company is positioned to provide strong sales growth and to improve operating profit compared to Heavy tyre market demand OE markets for OTR and heavy tyres continue to grow Aftermarket demand continues to grow Nokian Tyres financial position remains solid No major loans due for payment in 2011 Equity ratio 68.4% Undrawn facilities available 33

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35 INDEX 1. General overview of Nokian Tyres financial performance 3. Profit centres (incl. Russian operations) 4. Other markets 5. Nokian Tyres going forward 6. Appendixes The Board s proposals to the AGM Shareholders Share price development Competitor comparison E Magazine test results Examples of new products and innovations Winter tyre legislation in Europe Personnel Financing: Loans and net Financial Expenses Tables of financial figures 35

36 APPENDIX: BOARD S PROPOSALS TO AGM Dividend Board s proposal 0.65 /share Dividend: The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0,65 per share be paid for the fiscal year 2010 Annual General Meeting on 7 April, 2011 Record date 12 April, 2011 Payment Date 27 April, ,0 168,9 169,7 90,0 % 0,9 160,0 80,0 % 139,9 140,0 70,0 % 120,0 107,3 60,0 % m 100,0 73,8 82,2 0,550,0 % 83,8 80,0 0,3 0,3 0,3 0,4 0,4 0,3 0,462,3 0,4 40,0 % 0,4 58,3 60,0 47,6 49,9 49,9 30,0 % 33,6 38,0 40,0 25,2 25,9 27,9 20,0 % 19,8 16,7 20,0 6,9 8,8 11,7 10,0 % 0,0 0,0 % Net Profit Dividends Share of Profit (%) 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 0,065 0,083 0,65 0,5 0,4 0,4 0,31 0,217 0,23 0,156 0,

37 APPENDIX: BOARD S PROPOSALS TO AGM Members of the Board of Directors, remuneration and auditor The Nomination and Remuneration Committee s proposal for members of the board: Seven members Six of the current Board members to continue: Kim Gran, Hille Korhonen, Hannu Penttilä, Petteri Walldén, Aleksey Vlasov, Kai Öistämö New Board member proposal: Mr. Benoit Raulin, representative of Bridgestone Europe Kim Gran is the President and CEO of the Company. The other Board members are independent of the Company. All Board members except Benoit Raulin are independent of any major shareholders of the Company. Remuneration proposed to remain unchanged: The fee paid to the Chairman of the Board would be EUR 70,000 per year, and the fee paid to Members of the Board EUR 35,000 per year 60% of the annual fee be paid in cash and 40% in company shares to the effect that in the period from 8 April to 29 April 2011, EUR 28,000 worth of Nokian Tyres plc shares will be purchased at the stock exchange on behalf of the Chairman of the Board and EUR 14,000 worth of shares on behalf of each Board Member Each member of the Board will receive a meeting fee of EUR 600 per each attended meeting It is not proposed to pay a separate compensation to the President and CEO for Board work Board s proposal for the auditor: Authorised Public Accountant KPMG Oy Ab Lasse Holopainen, Authorised Public Accountant, acting as the auditor with principal responsibility Fees according to current practice 37

38 APPENDIX Major shareholders as of 31 December, 2010 Number of Share of Change from Major Domestic Shareholders Shares Capital (%) previous month 1 Varma Mutual Pension Insurance Company Ilmarinen Mutual Pension Insurance Company The State Pension Fund Tapiola Mutual Pension Insurance Company Nordea OP Investment Funds Svenska litteratursällskapet i Finland r.f Etera Mutual Pension Insurance Company Sijoitusrahasto Aktia Capital Nordea Nordenfonden Major Domestic Shareholders total % Foreign Shareholders 1) % Bridgestone Europe NV/SA 2) % Division by Category as of 31 Dec, 2010 Corporations, 2.5% Non-profit, 3.6% Fin. & insurance, 5.3% Households, 12.0% General, 14.2% Nominee reg. and non- Finnish, 62.4% Total number of shares: Shareholder development by category Q4/ Q4/ % Nominee registered % % % % Z General government Household Finance and insurance Note: Options, free (31 December, 2010) 2007A: 1,736,744 (104,740 in company's possession) 2007B: 2,249,875 (423,940 in company's possession) 2007C: 2,250,000 (1,086,500 in company's possession) 2010A: 1,320,000 ( in company's possession) 2010B: 1,340,000 (1,340,000 in company's possession) 2010C: 1,340,000 (1,340,000 in company's possession) 1) Includes also shares registered in the name of a nominee. 38 2) In the name of a nominee.

39 APPENDIX Comparing share price development to main indexes Share price development, indexed 2003 = Nokian Tyres, +707% RTS, +393% Competitors +84% OMX Hel Cap, +44% - 01-Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul-10 Nokian Competitors RTS OMX Hel Cap Nokian Tyres by Dec Last 8 years Last 3 years Last 2 years LTM L6M L3M Last month High 33,30 33,30 27,99 27,99 27,99 27,99 27,99 Average 15,03 19,11 17,42 21,55 24,32 25,96 26,91 Low 3,30 7,23 7,27 15,95 19,40 24,51 25,33 Source: Factset, as of 31 Dec ) The composite consists of an indexed average values of the main peers of Nokian Tyres. 2) OMX Helsinki Cap is calculated assuming a natural continuation of HEX Portfolio Index. 39

40 APPENDIX Competitor comparison E: Nokian Tyres the most profitable tyre producer Nokian Tyres operational performance (growth and profitability) has been clearly better than that of the main peers during the past 10 years. The clearly better profitability protects the company profits during recessions and potential downturns. Net sales change CAGR E Nokian 6.1% Michelin 1.8% Bridgestone -0.9% Continental n.m. 1) Net income E CAGR Margin2010 Nokian 12.1% 16.0% Michelin 12.7% 5.2% Bridgestone 3.3% 3.4% Continental n.m. 2.2% Source: Results (company websites) and 2010 consensus estimates for the peers as per Reuters 18 January Note: n.m. means that the results would be non-meaningful or that the calculation is not possible due to negative results. 1) Continental sales for 2008 not comparable due to VDO acquisition. 40 COMPETITORS ESTIMATE 2010 IS BASED ON CONSENSUS ESTIMATES, NOKIAN TYRES ON ACTUAL FIGURES.

41 APPENDIX The new products test success continues both in summer and in winter WINTER TYRES Nokian Hakkapeliitta 7 Next generation studded tyre New studded winter tyre family for core markets. Winner in practically all magazine tests, e.g.: - Tekniikan Maailma (Finland) - Tuulilasi (Finland) - Vi Bilägare (Sweden) - Aftonbladet BIL (Sweden) - Za Rulem (Russia) - Avto Centr (Ukraine) Nokian Hakkapeliitta 7 SUV Firm grip, sturdy performance Same technical solutions as in Nokian Hakkapeliitta 7 Nokian Hakkapeliitta R Safe and reliable friction tyre Rolls lightly and gives excellent grip. Test victories e.g.: - Vi Bilägare (Sweden) - Za Rulem (Russia) - Avto Centr (Ukraine) SUMMER TYRES Nokian Hakka H and Nokian Hakka Z Summer tyre families for core markets. Test victories e.g.: - Tekniikan Maailma (Finland) - Auto, Motor & Sport (Sweden) - Motor (Norway) - Za Rulem (Russia) Nokian H Summer tyre for CE and North America. Test victory: - ADAC Motorwelt (Germany) Nokian Hakkapeliitta 7 Nokian Hakkapeliitta R Clear benefits for Nokian Tyres Further strengthen market and price leader position in core markets Superior product range in winter tyres Market leader products a spearhead for success Technological leadership always the driver for growth! 41

42 APPENDIX Magazine tests Autumn 2010 Magazine Country Product Result Strength Swedish Nokian Hakkapeliitta 7, 205/55 R16 1 / 7 Best winter tyre, winter properties on ice, snow slush. Ukrainian Nokian Hakkapeliitta 7, 205/55 R16 1/ 13 Winter grip, handling Russian Nokian Hakkapeliitta 7, 205/55 R16 1 / 10 All winter properties, low fuel consumption. Swedish Nokian Hakkapeliitta 7, 205/55 R16 1 / 14 Properties on snow and ice. Finnish Nokian Hakkapeliitta 7, 205/55 R16 1 / 13 Winter grip and handling. Finnish Nokian Hakkapeliitta 7, 205/55 R16 1 / 9 Braking and acceleration on ice. Swedish Nokian Hakkapeliitta 7, 205/55 R16 1 tie / 5Braking and grip on snow and ice, low RR. Russian Nokian Hakkapeliitta 7, 175/65 R14 1 tie / 8 Properties on snow and ice. Ukrainian Nokian Hakkapeliitta 7, 175/65 R14 1 / 3 Snow and ice grip, ice braking. Swedish Nokian Hakkapeliitta R, 205/55 R16 1 / 8 Balanced properties overall, low rolling resistance. Russian Russian Nokian Hakkapeliitta R, 205/55 R16 1 / 7 All winter properties, lowest fuel consumption. Belarusien Nokian Hakkapeliitta R SUV, 235/65 R17 1 / 9 Good properties on snow and ice, low RR. Ukrainian Nokian Hakkapeliitta R, 175/65 R14 1 / 10 Handling on ice and snow, slush properties. Ukrainian Nokian Hakkapeliitta R, 205/55 R16 2 tie / 8 Properties on snow and ice, low RR. Finnish Nokian Hakkapeliitta R, 205/55 R16 2 tie / 8 Handling on snow and ice, low rolling resistance. Swedish Nokian Hakkapeliitta R, 205/55 R16 2 tie / 14 Grip and handling on winter, low rolling resistance. Russian Nokian Hakkapeliitta R, 205/55 R16 2 tie / 14 Grip and handling on winter, lowest fuel consumption. Swedish Nokian Hakkapeliitta R, 205/55 R16 2 / 5 Good winter properties, low RR. 42

43 APPENDIX Examples of new products and innovations Nokian Hakka Green Summer tyre for core markets Environmentally friendly novelty, extremely low rolling resistance Fuel savings and less carbon dioxide emissions Superior grip and driving response If all Finnish car drivers would use use Nokian Hakka Green tyres, annual fuel savings would be over 114 million litres, which corresponds to 2,077 trailer loads. Carbon dioxide emissions would decrease by some 296,000 tonnes Nokian WR Winter tyre for Central Europe Advanced new-generation tyre family for any winter weather Environmentally friendly premium products feature nanotechnology, canola oil and the solid winter expertise of Nokian Tyres Nokian WR D3 for the economic driver (smaller sizes) Nokian WR A3 for sporty use (bigger sizes) Beyond All-Steel Challenging All-Steel special tyres Revolutionary technology of the future, used in harbour, mining and earthmoving machinery tyres Unique technical solution combining a multi-layer textile structure with a modern radial structure Better stability, longer life time, enhanced safety First top product: the Nokian HTS Straddle harbour tyre 43

44 APPENDIX Winter tyre legislation in Europe 44 Austria Bosnia Herzegovina Croatia Czech Republic Estonia Finland France Germany Latvia Lithuania Norway Romania * Serbia * Slovakia Slovenia Spain Sweden Switzerland Winter tyres are legally mandatory Winter tyres are mandatory if weather conditions so require Winter tyres are mandatory only if there is a specific road sign * Starting 2011

45 APPENDIX Personnel 31 December, 2010 Personnel at the end of the review period: 3,506 (3,292) Equity-owned Vianor: 1,409 (1,388) Russia: 851 (640) 45

46 APPENDIX Financing: loans on 31 December, 2010 Interest- Bearing Debt M ( ) 7 % 7 % 1 % Banks Pension Loans Finance Leases Market 85 % Interest-Bearing Debt M Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Cash and Cash Equivalents Interest-Bearing Net Debt

47 APPENDIX Financing: Net Financial Expenses Net Financial Expenses Q4/2010: 5.4 m and Q4/2009: -6.0 m M Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Net interest expenses Exchange Rate Differences 47

48 APPENDIX CONSOLIDATED INCOME STATEMENT CONSOLIDATED INCOME STATEMENT 10-12/ / / /09 Change Million euros % Net sales Cost of sales Gross profit Other operating income Selling and marketing expenses Administration expenses Other operating expenses Operating result Financial income Financial expenses Result before tax Tax expense ( Result for the period Attributable to: Equity holders of the parent Non-controlling interest Earnings per share from the result attributable to equity holders of the parent basic, euros diluted, euros )Tax expense in the consolidated income statement is based on the taxable result for the period.

49 APPENDIX CONSOLIDATED OTHER COMPREHENSIVE INCOME CONSOLIDATED OTHER COMPREHENSIVE INCOME 10-12/ / / /09 Million euros Result for the period Other comprehensive income, net of tax: Gains/Losses from hedge of net investments in foreign operations Interest rate swaps Translation differences on foreign operations Total other comprehensive income for the period, net of tax Total comprehensive income for the period Total comprehensive income attributable to: Equity holders of the parent Non-controlling interest

50 APPENDIX KEY RATIOS KEY RATIOS Change % Equity ratio, % Gearing, % Equity per share, euro Interest-bearing net debt, mill. euros Capital expenditure, mill. euros Depreciation, mill. euros Personnel, average Number of shares (million units) at the end of period in average in average, diluted

51 APPENDIX: CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL POSITION Million euros Non-current assets Property, plant and equipment Goodwill Other intangible assets Investments in associates Available-for-sale financial assets Other receivables Deferred tax assets Total non-current assets Current assets Inventories Trade receivables Other receivables Cash and cash equivalents Total current assets Equity Share capital Share premium Translation reserve Fair value and hedging reserves Paid-up unrestricted equity reserve Retained earnings Non-controlling interest Total equity Non-current liabilities Deferred tax liabilities Provisions Interest bearing liabilities Other liabilities Total non-current liabilities Current liabilities Trade payables Other current payables Provisions Interest-bearing liabilities Total current liabilities Total assets Changes in net working capital arising from operative business are partly covered by EUR 250 million domestic commercial paper programme. 51

52 APPENDIX CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CASH FLOWS 1-12/ /09 Million euros Cash flows from operating activities: Cash generated from operations Financial items and taxes Net cash from operating activities Cash flows from investing activities: Net cash used in investing activities Cash flows from financing activities: Proceeds from issue of share capital Change in current financial receivables and debt Change in non-current financial receivables and debt Dividends paid Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate changes Cash and cash equivalents at the end of the period

53 APPENDIX CONSOLIDATED STATEMENT OF CHANGES IN EQUITY A = Share capital, B = Share premium, C = Translation reserve D = Paid-up unrestricted equity reserve, E = Fair value and hedging reserves F = Retained earnings, G = Non-controlling interest, H = Total equity Equity attributable to equity holders of the parent Million euros A B C D E F G H Equity, Jan 1st Profit for the period Other comprehensive income, net of tax: Cash flow hedges Net investment hedge Translation differences Total comprehensive income for the period Dividends paid Exercised warrants Share-based payments Total transactions with owners for the period Change in non-controlling interest Equity, Dec 31st Equity, Jan 1st Profit for the period Other comprehensive income, net of tax: Cash flow hedges Net investment hedge Translation differences Total comprehensive income for the period Dividends paid Exercised warrants Share-based payments Total transactions with owners for the period Equity, Dec 31st

54 APPENDIX SEGMENT INFORMATION SEGMENT INFORMATION Million euros 10-12/ / / /09 Change % Net sales Passenger car tyres Heavy tyres Vianor Other operations Eliminations Total Operating result Passenger car tyres Heavy tyres Vianor Other operations Eliminations Total Operating result, % of net sales Passenger car tyres Heavy tyres Vianor Total Cash Flow II Passenger car tyres Heavy tyres Vianor Total

55 APPENDIX CONTINGENT LIABILITIES CONTINGENT LIABILITIES Million euros FOR OWN DEBT Mortgages Pledged assets OTHER OWN COMMITMENTS Guarantees Leasing and rent commitments Purchase commitments DERIVATIVE FINANCIAL INSTRUMENTS Million euros INTEREST RATE DERIVATIVES Interest rate swaps Notional amount Fair value FOREIGN CURRENCY DERIVATIVES Currency forwards Notional amount Fair value Currency options, purchased Notional amount Fair value Currency options, written Notional amount Fair value

56 APPENDIX DEFINITIONS OF CONSOLIDATED KEY FINANCIAL INDICATORS Earnings per share, euro: Result for the period attributable to the equity holders of the parent / Average adjusted number of shares during the period Earnings per share (diluted), euro: Result for the period attributable to the equity holders of the parent / Average adjusted and diluted number of shares during the period - The share options affect the dilution as the average share market price for the period exceeds the defined subscription price. Equity ratio, %: Total equity x 100 / (Total assets - advances received) Gearing, %: Interest-bearing net debt x 100 / Total equity Equity per share, euro: Equity attributable to equity holders of the parent / Adjusted number of shares on the reporting date Operating margin: Operating result, % of net sales 56

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